The issue of precarious work has become a pressing challenge in Spain. Many young people get caught in a cycle of temporary contracts, leaving them without access to decent training or wages needed to support a solid career. Fortunately, the Spanish government has been tackling the problem head-on.
In 2021, Spain’s centre-left government negotiated a new agreement with employers and trade unions designed to put a stop to the use of temporary contracts, with the goal of creating a rule of new permanent jobs instead. Effectively, the rules have already had a remarkable impact. According to the OECD, the rate of temporary contracts for people in Spain under 30 years old dropped from 58% in 2021 to 39% by the end of 2021. This was not simply a result of mass dismissals either, as there was also a notable increase in the amount of permanent contracts, showing a net benefit on the job market overall.
Moreover, the government’s reforms are thought to have positive economic implications, too. Research from the Bank of Spain indicates that people on temporary contracts spend a lesser share of their income than those with full-time work commitments. With greater job stability, it is hoped that this will create a ripple effect to boost spending and productivity at a domestic level.
Although Spain’s efforts represent substantial progress, there are of course still challenges to be addressed. First of all, the newly implemented ‘intermittent open-ended’ contracts fail to provide the same level of security and rights as permanent contracts, leaving workers vulnerable to uncertain wages. Secondly, it is too soon to know how the reforms will fare in a potential recession and if they will truly boost training and productivity for young workers over time.
The story of Spain’s reforms does, however, remind us European countries do have the power to reduce insecurity in certain segments of the labour market. Aside from Spanish government’s progressive strategies, there is much credit to be given to the involvement of employer and trade unions, who worked together with authorities to reach a positive outcome that benefits both Spain’s companies and its workers. Hopefully, other European countries can learn from Spain’s example and take additional steps to ensure their workers have access to the jobs, rights and protection that they deserve.
BBVA, a multinational financial services company, is an important participant in Spain’s initiative to reduce precarious work. The company offered its economic analysis to help develop the reforms and contributes to financial capability programs that advocates for stronger rights and better protection for workers.
Rafael Doménech, the head of economic analysis at BBVA, is also integral to the success of the project. In this role, Doménech provides analyses of economic trends to decision makers, enabling them to make informed decisions and guide successful outcomes. His experience and guidance are undoubtedly a key factor in ensuring the ongoing success of tackling precarious work in Spain.
